Manitowoc Reports Increase in Sales Over Q1 2016, Decrease from Q2 2015
August 9, 2016 - The Manitowoc Company Inc. has reported a 4% decrease in its second-quarter 2016 sales from $477.7 million in Q2 2015 to $457.7 million in Q2 2016. Company sales increased 7% from the first quarter of 2016. The increase in sales was primarily due to continued strength in tower cranes as a result of residential and commercial construction trends, particularly in Western Europe, as well as new product introductions. This improvement was partly offset by ongoing softness in mobile cranes driven largely by depressed oil and gas markets in the U.S.
"While the market conditions are beyond our control, we continue to execute our strategic initiatives by focusing on quality and reliability in all of our products, velocity and innovation, and aligning our cost structure to meet current and future demand levels," said Barry Pennypacker, president and CEO. "Our efforts are paying off. By focusing on items within our control, we tripled our adjusted operating income on flat sales during the first half of the year, underscoring the success of our efforts to drive Lean operating principles.”
He added that as the company approaches the back half of the year, market challenges will continue and a similar dynamic in sales with continued strength in tower cranes more than offset by continued weakness in mobile cranes. "In spite of the positive energy we experienced at bauma this year, it is clear that our customers remain cautious around spending given the ongoing global macro-economic uncertainty," Pennypacker said. "As a result, we have lowered our full-year 2016 sales and operating margin guidance. We are confident, however, that the actions we are taking now to position Manitowoc over the long term will allow us to exit this cycle stronger and poised to deliver significant profit growth and shareholder value creation."
For the full-year 2016, Manitowoc expects:
- Revenue – down approximately 10% to 12%;
- Adjusted operating income margins – approximately 1% to 2%;
- Depreciation – between $45 and $50 million;
- Amortization expense – between $3 and $4 million; and,
- Capital expenditures – approximately $45 to $50 million.
Restructuring Activities
On Aug. 8, 2016, The Manitowoc Company, Inc. announced its intent to relocate its crawler crane manufacturing operations from Manitowoc, Wis., to Shady Grove, Pa. This action addresses the company’s strategic imperative of reducing its manufacturing capacity globally. Manitowoc’s crawler business intends to maintain its product engineering and related support functions in the Manitowoc area. The Manitowoc Company Inc. also will maintain its headquarters.
The company expects to recognize cash outflows of approximately $35-50 million in settlement of these expenses by the end of 2017. In addition, the company expects to recognize non-cash charges of approximately $105-120 million. In total, this initiative is expected to generate annualized pre-tax cost savings of $25-30 million.
